The aim of this paper is to analyse the cross-country variation in the growth elasticity of poverty across a sample of developing countries during the period from 1990 to 2000. In order to identify variables that may explain the cross-country variation in the growth elasticity of poverty, the paper sets up a theoretical framework. Subsequently, the explanatory power of these variables is tested empirically by panel data econometric analysis. For a sample of 52 low and middle income countries, it is found that the level of initial income inequality, credit available to the private sector, literacy, the extent of business regulations and trade openness are important determinants of the growth elasticity of poverty. Countries that reduce regulatory burdens, improve literacy, increase access to finance, undertake land reforms (asset redistribution), and provide safety nets while liberalizing trade can create more growth and ensure that it is pro-poor. The paper identifies variables (at a cross-country level) that may guide the conscious policies which create pro-poor growth.

The goal of this paper is to understand
better, at the empirical level, how public spending
contributes to growth by focusing on both the level and
composition of public spending, in connection to the
dynamics of GDP per capita growth. It attempts to answer two
specific questions: (a) What are the policy conditions under
which public spending contributes positively to growth? and
(b) What are the public spending components that have a
stronger and longer-lasting impact on growth? The analysis
is applied to a sample of seven fast-growing developing
countries: Korea, Singapore, Malaysia, Thailand, Indonesia,
Botswana, and Mauritius, which have been among the top
performers in the world in terms of GDP per capita growth
during the period (1960-2006). The rationale for this
country sample selection is twofold. The first hypothesis is
that, given their positive growth achievements over a
relatively long time period, perhaps it is more
straightforward to establish a link to public spending in
those countries. Second...

This paper attempts to quantify the
impact of the HIV/AIDS epidemic on social capital with
cross-country data. It estimates reduced-form regressions of
the main determinants of social capital controlling for HIV
prevalence, institutional quality, social distance, and
economic indicators using data from the World Values Survey.
The results obtained indicate that HIV prevalence affects
social capital negatively. The empirical estimates suggest
that a one standard deviation increase in HIV prevalence
will lead to a 1 percent decline in trust, controlling for
other determinants of social capital. If one moves from a
country with a relatively low level of HIV prevalence such
as Estonia, to a country with a high level such as Zimbabwe,
one would observe an approximate 8 percent decline in social
capital. These results are robust in a number of dimensions
and highlight the empirical importance of an additional
mechanism through which HIV/AIDS hinders the development process.

This paper investigates the relationship
between sectoral growth patterns and employment outcomes. A
broad cross-country analysis reveals that in middle-income
countries, employment responds more to growth in less
productive and more labor-intensive sectors. Employment in
middle-income countries is susceptible to a resource curse,
and grows rapidly in response to manufacturing and export
manufacturing growth. Within Brazil, Indonesia, and Mexico,
the effects of different sectoral growth patterns are
context dependent, but differences in sectoral growth
effects on employment and wages are substantially reduced in
states or provinces with higher measured labor mobility.
Consistent with this, aggregate employment and wage effects
of growth by sector are close to uniform when examined over
longer time horizons, after labor has an opportunity to
adjust across sectors. The results reinforce the importance
of growth in more labor-intensive sectors, and suggest that
job mobility may be an important mechanism to diffuse the
benefits of capital-intensive growth.

ROMA are the main poverty risk groups in
many of the countries of Central and Eastern Europe.
However, information on their living conditions, and the
characteristics of their poverty is scarce, fragmented, and
often anecdotal. This paper analyzes data from a new
cross-country household survey, conducted by the Center for
Comparative Research, at Yale University. The survey is the
first of its kind which addresses the ethnic dimension of
poverty across countries, covering Roma in Hungary,
Bulgaria, and Romania. The paper finds that welfare among
Roma households is significantly lower than that of
non-Roma, in terms of both material deprivation (consumption
and income), and other measures of deprivation, including
housing status, education levels, and employment
opportunities. Multivariate analysis confirm that,
controlling for other household characteristics, there is a
strong negative association between Roma ethnicity, and
welfare. A large part of this association appears to be due
to differences in endowments...

The financial system in Bangladesh has
suffered from years of systemic and chronic problems,
represented by weak supervision and enforcement, deficient
accounting and reporting practices, and more importantly,
widespread loan defaults and delinquencies. It is widely
perceived that major inadequacies in the financial sector
have had a considerable growth restraining effect over the
years, by inhibiting private investment activities and
productivity growth, as well as promoting misallocation of
resources. It is paramount important that the government
takes an urgent policy action to reform the mal-functioning
financial sector. The main objective of such reforms is to
develop a market oriented, disciplined modem system for
mobilization of resources, efficient allocation of resources
from both domestic and foreign sources, and reduction of
poverty through sustained economic growth. This paper is
organized as follows. Section two reviews the recent
theoretical and empirical literature on finance and growth.
Section three summarizes the main findings of our
cross-country analysis...

The author studies the links between
macroeconomic adjustment and poverty. First, he summarizes
some of the recent evidence on poverty in the developing
world. Second, he reviews the various channels through which
macroeconomic policies affect the poor. Third, the author
emphasizes the role of the labor market. He develops an
analytical framework that captures some of the main features
of the urban labor market in developing countries and
studies the effects of fiscal adjustment on wages,
employment, and poverty. Fourth, he presents cross-country
regressions linking various macroeconomic and structural
variables to poverty. The author finds that output growth
and real exchange rate depreciations tend to lower poverty,
while illiteracy, income inequality, and macroeconomic
volatility tend to increase poverty. In addition, the impact
of growth on poverty appears to be asymmetric, and to result
from a significant relationship between episodes of
increasing poverty and negative growth rates.

Using cross-country and panel
regressions, this article investigates how gender inequality
in education affects long-term economic growth. Such
inequality is found to have an effect on economic growth
that is robust to changes in specifications and controls for
potential endogeneities. The results suggest that gender
inequality in education directly affects economic growth by
lowering the average level of human capital. In addition,
growth is indirectly affected through the impact of gender
inequality on investment and population growth. Some 0.4-0.9
percentage points of differences in annual per capita growth
rates between East Asia and Sub-Saharan Africa, South Asia,
and the Middle East can be accounted for by differences in
gender gaps in education between these regions.

The authors find that raw materials
inventories in the manufacturing sector in the 1970s and
1980s were two to three times higher in developing countries
than in the United States, despite the fact that in most
developing countries real interest rates were at least twice
as high. Those significantly high levels of inventories are
a burden and an obstacle to country competitiveness and need
to be addressed. Poor infrastructure and ineffective
regulation, as well as deficiencies in market development,
rather than the traditional factors used in inventory models
(such as interest rates and uncertainty), are the main
determinants and explain these differences. Cross-country
estimations show that a one standard deviation worsening of
infrastructure increases raw materials inventories by 11
percent to 37 percent, and a one standard deviation
worsening of markets increases raw materials inventories by
18 percent to 37 percent. These findings are robust across a
number of different proxies and specifications, including an
industry-level specification that controls for fixed country effects.

The evidence from individual cases and
from cross-country analysis supports the view that
globalization leads to faster growth and poverty reduction
in poor countries. To determine the effect of globalization
on growth, poverty, and inequality, the authors first
identify a group of developing countries that are
participating more in globalization. China, India, and
several other large countries are part of this group, so
well over half the population of the developing world lives
in these globalizing economies. Over the past 20 years, the
post-1980 globalizers have seen large increases in trade and
significant declines in tariffs. Their growth rates
accelerated between the 1970s and the 1980s and again
between the 1980s and the 1990s, even as growth in the rich
countries and the rest of the developing world slowed. The
post-1980 globalizers are catching up to the rich countries,
but the rest of the developing world (the non-globalizers)
is falling further behind. Next, the authors ask how general
these patterns are...

Social welfare functions that assign
weights to individuals based on their income levels can be
used to document the relative importance of growth and
inequality changes for changes in social welfare. In a large
panel of industrial and developing countries over the past
40 years, most of the cross-country and over-time variation
in changes in social welfare is due to changes in average
incomes. In contrast, the changes in inequality observed
during this period are on average much smaller than changes
in average incomes, are uncorrelated with changes in average
incomes, and have contributed relatively little to changes
in social welfare.

Income differences arise from many
sources. While some kinds of inequality, caused by effort
differences, might be associated with faster economic
growth, other kinds, arising from unequal opportunities for
investment, might be detrimental to economic progress. This
study uses two new metadata sets, consisting of 118
household surveys and 134 Demographic and Health Surveys, to
revisit the question of whether inequality is associated
with economic growth and, in particular, to examine whether
inequality of opportunity -- driven by circumstances at
birth -- has a negative effect on subsequent growth. The
results are suggestive but not robust: while overall income
inequality is generally negatively associated with growth in
the household survey sample, we find no evidence that this
is due to the component associated with unequal
opportunities. In the Demographic and Health Surveys sample,
both overall wealth inequality and inequality of opportunity
have a negative effect on growth in some of the preferred
specifications...

This study investigates whether culture in general and religion in particular mitigate earnings management. Using a cross-country data set, empirical tests based on rank regressions indicate that earnings management is unrelated to both religious affiliation and the degree of religiosity. In contrast, earnings management is found to be negatively related to the updated Hofstede cultural variable of individualism and positively related to uncertainty avoidance. The results also indicate that the positive impact of the legal environment in mitigating earnings management, documented by Leuz, can no longer be demonstrated after controlling for culture.; Jeffrey L. Callen, Mindy Morel, Grant Richardson

The authors aim at contributing to
understand the dispersion of returns from policy reforms
using cross-country regressions. The authors compare the
"before reform" with "after reform" GDP
growth outcome of countries that undertook
import-liberalization and fiscal policy reforms. They survey
a large sample (about 54) of developing countries over the
period 1980-99. The benefits of openness to trade and fiscal
prudence have been extensively identified in the growth
literature, but the evidence from simple cross-section
analysis can sometimes be inconclusive and remains
vulnerable to criticism on estimation techniques, such as
identification, endogeneity, multi-colinearity, and the
quality of the data. The authors use a different analytical
framework that establishes additional controls. First, they
construct a counterfactual control group. These are
countries that-under specific thresholds-did not introduce
policy reforms under scrutiny. Second, the authors also try
to use the most appropriate variable of policy reform...

The authors investigate the relationship
between weak growth performance and low investment rates in
Africa. The cross-country evidence suggests no direct
relationship. The positive and significant coefficient on
private investment appears to be driven by Botswana's
presence in the sample. Allowing for the endogeneity of
private investment, controlling for policy, and positing a
nonlinear relationship make no difference to the conclusion.
Higher investment in Africa would not by itself produce
faster GDP growth. Africa's low investment and growth
rates seem to be symptoms of underlying factors. To
investigate those factors and to correct for some of the
problems with cross-country analysis, the authors undertook
a case study of manufacturing investment in Tanzania. They
tried to identify why output per worker declined while
capital per worker increased. Some of the usual
suspects--such as shifts from high- to low-productivity
subsectors, the presence of state-owned enterprises, or poor
polices--did not play a significant role in this decline.
Instead...

Output collapses, and crises are a fact
of life. Severe economic downturns occur periodically, and
have grave consequences on the poor. The authors propose a
new measurement for economic downside risk, and severity:
Growth at risk. Similar to the concept of Value at Risk in
finance, Growth at Risk summarizes the expected maximum
economic downturn over a target horizon at a given
confidence level. After providing a taxonomy of growth
risks, the authors construct a panel data, set on Growth at
Risk for 84 countries, over the period 1980-98. On average,
different regional groups experience very distinct Growth at
Risk patterns over time. 1) Non-OECD countries experience a
higher downturn risk, while OECD countries' downturn
risks for both big, and small recessions are the lowest
among all groups. 2) East Asia countries, which had been
growing faster, had a high Growth at Risk for big downturns,
at around six percent, and it rose dramatically at the end
of the 1990s. 3) Latin America, and Sub-Saharan Africa also
maintained high Growth at Risk for both big...

One of the important factors for
economic development is the existence of an effective tax
system. This paper deals with the concept and empirical
estimation of countries' taxable capacity and tax
effort. It employs a cross-country study from a sample of
110 developing and developed countries during 1994-2009.
Taxable capacity refers to the predicted tax-to-gross
domestic product ratio that can be estimated empirically,
taking into account a country's specific macroeconomic,
demographic, and institutional features, which all change
through time. Tax effort is defined as an index of the ratio
between the share of the actual tax collection in gross
domestic product and taxable capacity. The use of tax effort
and actual tax collection benchmarks allows the ranking of
countries into four different groups: low tax collection,
low tax effort; high tax collection, high tax effort; low
tax collection, high tax effort; and high tax collection,
low tax effort. The analysis provides broad guidance for tax
reforms in countries with various levels of taxable capacity
and revenue intake.

The author provides theoretical and
empirical evidence of a negative association between income
inequality and real exchange rates. First, he builds a
theoretical model showing the transmission mechanism from
inequality to real exchange rates. Second, using
cross-country data, he demonstrates that the theoretical
argument has empirical support. The association is large,
significant, and robust to alternative specifications of the
reduced form model and estimation methodologies. These
findings provide empirical support for Poverty Reduction
Strategy Papers, government strategies agreed on with the
World Bank that hinge on four major objectives: accelerating
equity-based growth, guaranteeing access to basic social
services for the poor, expanding opportunities for
employment and income-generating activities for the poor,
and promoting good governance. The author's analysis
indicates that "equity-based growth" and
"export-driven growth" are compatible policy
goals. But the negative relationship between inequality and
real exchange rates does not imply that policies aimed at
dramatic redistribution will automatically lead to real
depreciation of the domestic currency...

This paper revisits four recent
cross-country empirical studies on the effects of inequality
on growth. All four studies report strongly significant
negative effects, using the popular system generalized
method of moments estimator that is frequently used in
cross-country growth empirics. This paper shows that the
internal instruments relied on by this estimator in these
inequality-and-growth regressions are weak, and that weak
instrument-consistent confidence sets for the effect of
inequality on growth include a wide range of positive and
negative values. This suggests that strong conclusions about
the effect of inequality on growth— in either
direction—cannot be drawn from these studies. This paper
also systematically explores a wide range of alternative
sets of internal instruments, and finds that problems of
weak instruments are pervasive across these alternatives.
More generally, the paper illustrates the importance of
documenting instrument strength, basing inferences on
procedures that are robust to weak instruments...